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Semester Test

Accounting
The process of planning, recording, analyzing, and interpreting financial information.
Accounting equation
An equation showing the relationship among assets, liabilities, and owner’s equity.
Asset
Anything of value that is owned.
Business plan
A formal written document that describes the nature of a business and how it will operate.
Capital account
An account used to summarize the owner’s equity in a business.
Compound interest
Interest paid on an original amount deposited in a bank plus any interest that has been paid.
Creditor
A person or business to whom a liability is owed.
Entrepreneur
Someone who owns, operates, and takes the risk of a business venture.
Equities
Financial rights to the assets of a business.
Ethics
The principles of right and wrong that guide an individual in making decisions.
Expense
The cost of goods or services used to operate a business.
Financial statements
Financial reports that summarize the financial condition and operations of a business.
Interest
An amount paid for the use of money for a period of time.
Liability
An amount owed.
Net worth statement
A formal report that shows what an individual owns, what an individual owes, and the difference between the two.
Owner’s equity
The amount remaining after the value of all liabilities is subtracted from the value of all assets.
Proprietorship
A business owned by one person.
Revenue
An increase in equity resulting from the sale of goods or services.
Sale on account
A sale for which payment will be received at at later date.
Service business
A business that performs an activity for a fee.
Transaction
Any business activity that changes assets, liabilities, or owner’s equity.
Withdrawals
Assets taken from the business for the owner’s personal use.
Accounts payable
Amounts to be paid in the future for goods or services already acquired.
Accounts receivable
Amounts to be received in the future due to the sale of goods or services.
Chart of accounts
A list of accounts used by a business.
Credit
An amount recorded on the right side of an account.
Debit
An amount recorded on the left side of an account.
Check
A business form ordering a bank to pay cash from a bank account.
Double-entry accounting
The recording of debit and credit parts of a transaction.
Invoice
A form describing the goods or services sold, the quantity, the price, and the terms of sale.
Journal
A form for recording transactions in chronological order.
Journalizing
Recording transactions in a journal.
Memorandum
A form on which a brief message is written to describe a transactions.
Proving cash
Determining that the amount of cash agrees with the accounting records.
Receipt
A business form giving written acknowledgement for cash received.
Source document
A business paper from which information is obtained for a journal entry.
Correcting entry
If a transaction has been improperly journalized and posted to the ledger, the incorrect journal entry should be corrected with an additional journal entry, called a correcting entry.
File maintenance
The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current.
General ledger
A ledger that contains all accounts needed to prepare financial statements.
Ledger
A group of accounts.
Opening an account
Writing an account title and number on the heading of an account.
Posting
Transferring information from a journal entry to a ledger account.
Bank statement
A report of deposits, withdrawals, and bank balances sent to a depositor by a bank.
Blank endorsement
An endorsement consisting only of the endorser’s signature.
Canceled check
A check which has been paid by the bank.
Cash over
A petty cash on hand amount that is more than the recorded amount.
Cash short
A petty cash on hand amount that is less than the recorded amount.
Checking account
A bank account from which payments can be ordered by a depositor.
Debit card
A bank card that automatically deducts the amount of a purchase from the checking account of the cardholder.
Deposit slip
A bank form which lists the checks, currency, and coins an account holder is adding to a bank account.
Dishonored check
A check that a bank refuses to pay.
Electronic funds transfer
A computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents.
Endorsement
A signature or stamp on the back of a check transferring ownership.
Non-sufficient funds check
A check dishonored by the bank because of insufficient funds in the account of the maker of the check.
Petty cash slip
A form showing proof of a petty cash payment.
Postdated check
A check with a future date on it.
Restrictive endorsement
An endorsement restricting further transfer of a check’s ownership.
Special endorsement
An endorsement indicating a new owner of a check.
Voided check
A check that cannot be processed because the maker has made it invalid.

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